New Missouri Law Lowers Minimum Wage in St. Louis

While many cities are increasing the minimum wage, St. Louis, Missouri is heading in the opposite direction after a new state law took effect Monday.

“This increase in the minimum wage might read pretty on paper, but it doesn’t work in practice,” said Missouri Gov. Eric Greitens.

As of Monday, a new state law took effect that banned cities from creating a higher minimum wage than the wage for the state overall. That means the $10-per-hour minimum wage set by the St. Louis city government dropped to $7.70 to match the rest of the state. St. Louis planned to move the minimum wage to $11 next year. The federal minimum wage is $7.25 an hour.

Republican State Sen. Dan Hegeman said the higher minimum could have forced employers to cut jobs or move out.

“You end up having fewer jobs and you do a disservice to the workers,” Hegeman said. “In my heart of hearts, I really think it hurts people in the long run.”

Greitens said the higher wage in St, Louis, which began two months ago, would “kill jobs, and despite what you hear from liberals, it will take money out of people’s pockets.”

“Our state needs more private-sector paychecks and bigger private-sector paychecks,” Greitens said in a statement. “Politicians in St. Louis passed a bill that fails on both counts.”

“Government imposes an arbitrary wage, and small businesses either have to cut people’s hours or let them go,” Greitens said.

Seattle, which was a leader in raising the minimum wage, has been closely examined for the impact of a higher wage.

The Seattle Minimum Wage Study Team at the University of Washington examined the 2014 law that first pushed the city’s minimum wage from $9.47 per hour to $11 per hour in 2015 and then boosted that to $13 per hour in 2016.

“Our preferred estimates suggest that the Seattle Minimum Wage Ordinance caused hours worked by low-skilled workers (i.e., those earning under $19 per hour) to fall by 9.4 percent during the three quarters when the minimum wage was $13 per hour, resulting in a loss of 3.5 million hours worked per calendar quarter,” the report said.

“The reduction in hours would cost the average employee $179 per month, while the wage increase would recoup only $54 of this loss, leaving a net loss of $125 per month (6.6 percent), which is sizable for a low-wage worker,” the report added.

St. Louis business owners had said the wage increase was an issue.

“It’s a tough pill to swallow and it doesn’t seem very well thought-out to go from $7.70 an hour to $10 and $11 next year,” said Ed Brock, owner of Johnnie Brock’s Dungeon, a costume and accessories shop.

Brock said that when the wage increase took effect, he hired fewer employees.